ICOC

[BigSully1]

Upside issued a buy for ICOC  Tuesday. Their exit was very timely, I wonder how their re-entry will fare.

I guess I'll find out, cause I bought today also. ER Friday.

[David Randolph]

Upside issued a buy for ICOC  Tuesday. Their exit was very timely, I wonder how their re-entry will fare.

It looks like one can't win them all:



Investors really didn't like that earnings miss in fiscal 1st quarter, 2008:



Hmm, management blamed the weakness on seasonality:

«"As expected, we experienced our usual seasonal weakness of the first quarter," stated A. John Knapp, Jr., the Company's President and CEO, "but due to the growth we experienced in the last two fiscal years, our first quarter fiscal 2008 operating income exceeded the operating income of the first quarter of the previous year by 51%. Our European and Bayshore Industrial business segments led the way to this increase. Thus far in the second quarter of fiscal 2008, we have indicators that demand will increase from the first quarter; and, we expect to see year-over-year revenue and operating income growth in our second quarter of fiscal 2008."»

Well, if this thing in bold happens ICOC will have an EPS of more than $0.25 in fiscal Q2 2008 (ended in March 31st). There weren't any pre-announcements or analysts downgrades (all analysts covering the stock rate it a "buy").

ICOC is trading at just 9 times the fiscal 2008 estimate and 8 times the 09 estimate. However, I see analysts here in my Thomson Analytics service with significantly higher estimates ($0.98 EPS expected for fiscal 09) - Yahoo numbers are incorrect, outdated.

I worry that if I buy ICOC this is another "buy because it is at a discount" play, which I said I would shy away after NVTL's loss. But, because I know the factors which influence ICOC's revenues and earnings reasonably well, I remember that resin prices play a major role in the company's fundamentals. I thought the discounted valuation could be due to lower resin prices due to the global economic slowdown, but no, resin prices are stable or higher in 2008:

http://www.plasticsexchange.com/default.aspx

However, they say end-user demand is soft.

The earnings release is in May, 5, so there are still two weeks.

I feel there's some upside in ICOC, but I'm not confident enough to recommend buying it for now. Maybe I'll be more secure if I can grab it more closer to the $6.65 support, that could limit the downside in case of another earnings miss.

Well, I'm not into buying discounts anymore. I prefer to pay a higher price for the best merchandise.